Safe Workplaces Executive Order Draws Criticism

The president's Fair Pay and Safe Workplaces order will require that new federal contractors with contracts valued at more than $500,000 disclose labor law violations for the previous three years. The National Association of Manufacturers responded that this is "a dangerous game for our President to be playing with federal contracts."

Jul 31, 2014

The White House announced President Obama will sign a Fair Pay and Safe Workplaces Executive Order, applying to new federal procurement contracts valued at more than $500,000, that will require those seeking contracts to disclose their labor law violations for the previous three years. "Contracting officers will take into account only the most egregious violations, and each agency will designate a senior official as a Labor Compliance Advisor to provide consistent guidance on whether contractors' actions rise to the level of a lack of integrity or business ethics," the White House fact sheet about the order explains. "This advisor will support individual contracting officers in reviewing disclosures and consult with the Department of Labor. The Executive Order will ensure that the worst actors, who repeatedly violate the rights of their workers and put them in danger, don't get contracts and thus can’t delay important projects and waste taxpayer money."

The administration expects the order to be implemented on new contracts in stages, on a prioritized basis, during 2016.

Joe Trauger, the National Association of Manufacturers' vice president of Human Resources Policy, criticized the order and predicted it "will create significant problems for businesses who wish to provide goods and or services to the federal government. According to reports, the order will require federal procurement officers to effectively act as enforcers of labor laws that even the Department of Labor itself has difficulty understanding, which is a dangerous game for our President to be playing with federal contracts," his commentary stated. "Effectively, the President is sanctioning a practice known as 'blacklisting' companies from federal contracts due to even minor infractions of complex labor laws under the Fair Labor Standards Act. While true bad actors deserve consequences, there are already procedures in place to address those cases.

"The Fair Labor Standards Act is a labyrinth of federal statute, regulations, guidance, and case law that ensnares even the most cautious employers. It encompasses things like how employees are classified, overtime pay, and recordkeeping requirements. All of these issues are fraught with landmines that even sophisticated employers can run into without knowing it. In fact, even the Department of Labor itself ran afoul of employee classification regulations recently and were forced to issue back-pay to a number of the nearly 2,000 of its employees who filed a grievance under the FLSA in 2010. Ironically, the very federal agency charged with enforcing the requirements would be blacklisted or put on a 'contract avoidance list' under this new executive order," Trauger wrote. "Further complicating matters is the fact that the administration is in the process of regulatory rulemaking to change various aspects of the FLSA, which is certain to create violations out of what were once legal practices and bog employers down with additional litigation on matters that have already been largely ironed out in current law. In the end, there is already a process federal procurement officers can go through if there are contractors having trouble complying with the FLSA. Creating a 'contract avoidance list' and dispatching a member of the Politburo to each agency to police the list seems unnecessary."

The disclosure mandate will cover 14 federal statutes and equivalent state laws, include laws addressing wage and hour, safety and health, collective bargaining, family and medical leave, and civil rights protections. Agencies will also require contractors to collect similar information from many of their subcontractors, according to the White House.

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